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Extraordinary Forward Guidance in Canada During the Pandemic

Author

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  • Christopher S. Sutherland

Abstract

We consider two trade-offs inherent to extraordinary forward guidance (EFG): potency versus flexibility, and the credibility of forward guidance versus the credibility of inflation targeting. We argue that the form of EFG used by the Bank of Canada during the COVID‑19 pandemic balanced both trade-offs relatively well. We also draw three lessons from the Bank’s pandemic EFG experience.

Suggested Citation

  • Christopher S. Sutherland, 2026. "Extraordinary Forward Guidance in Canada During the Pandemic," Staff Analytical Papers 2026-1, Bank of Canada.
    • Handle: RePEc:bca:bocsap:26-1
    DOI: 10.34989/sap-2026-1
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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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